There are two key factors that involved in effective procurement; maximising profitability and reducing costs, these factors can be the difference between making a profit and your company losing money. Getting procurement right and building competitive procedures can be very time consuming and also involves some investment. This is why more and more companies are starting to outsource procurement.

A procurement company or buying group who is buying on behalf of many companies has a greater buying power than any of their individual clients. Of course for their clients this means a better deal. You can also take advantage of the relationships that they have built with their suppliers.

Certain companies have even more to gain from outsourcing procurement, those that dont have the internal resources or the market leverage to get the best deals are a great example. There are benefits for almost any company though, so you can expect to benefit whatever the current state of your business.

Benefits of outsourcing procurement include:

Letting someone else take care of your purchasing allows you to direct those resources elsewhere in your company. Saving the time you currently spend on purchasing allows you to focus more on what you do best.

No matter how large your orders for suppliers, a buying group will be buying more. Quite simply that bulk buying power means that they can get a better price than you could. Most buying groups will be purchasing on behalf of many companies with similar needs to yours.

What does your business do? What is your area of expertise? It probably isnt negotiating with suppliers. This is exactly what a buying group does all day and as you might expect they are good at it. No matter what your purchasing requirement, the right firm will know who the best supplier is for you. Your virtual procurement department will now be staffed by experienced procurement experts.

By outsourcing your procurement you also save dramatically on the cost of operating your own procurement department. Staff costs are one of the largest overheads in running an in house procurement department.

Those companies that are already experienced in procurement will also tend to find that the amount and quality of management information and purchasing analysis is improved by outsourcing. This means that you and your management team will always have a better understanding of your companys purchasing activities.

Author's Bio: 

Sarah Haines enjoys writing articles about the issues that affect UK businesses and strongly believes that using a buying group is a great solution for most UK companies.